Malaysia Insurance Guide

BNM is Malaysia's central bank and the primary regulator overseeing the insurance and takaful industry. It supervises insurers and insurance intermediaries under laws like the Financial Services Act 2013 and related regulations.

BNM issues policy documents, guidelines, and circulars to ensure compliance (e.g. standards on insurance practices, capital adequacy, consumer protection). These official regulations and circulars are available on BNM's website for download.

Any SME offering or dealing with insurance (or needing licensed insurance services) would fall under BNM's regulatory purview.

PERKESO, also known as SOCSO, is the statutory body under the Ministry of Human Resources that manages Malaysia's compulsory employment injury and social security schemes.

Employers must register every employee (local or foreign) with SOCSO and contribute to the Employees' Social Security scheme under the Employees' Social Security Act 1969. This provides mandatory coverage for work-related injuries, disabilities, or death.

Since 2018, the Employment Insurance System (EIS) – administered by SOCSO under the Employment Insurance System Act 2017 – is compulsory for all private sector employers as well. SMEs with at least one employee are required to pay EIS contributions (0.2% wages from employer and employee each) which fund unemployment benefits.

The Ministry of Human Resources (MOHR) via its Department of Labour enforces the Workmen's Compensation Act 1952 (Act 273), which historically requires employers to insure certain workers not covered by SOCSO.

Section 26 of the Act mandates every employer to purchase insurance coverage for their workmen to meet any liability for workplace injuries. In practice, this led to the Foreign Workers' Compensation Scheme (FWCS) – a compulsory insurance policy that employers had to buy for each foreign worker.

Since most foreign workers were brought under SOCSO's coverage from 2019, the Workmen's Compensation Act now serves a residual role. MOHR's Department of Labour still oversees compliance for any required FWCS policies and handles compensation claims under Act 273.

Malaysia's Road Transport Department (JPJ) regulates road vehicles and enforces motor insurance mandates. By law, no vehicle may be driven on public roads without valid motor insurance coverage (at least third-party liability).

The Road Transport Act 1987 makes third-party motor insurance compulsory for all vehicle owners in Malaysia. In practice, JPJ will not issue or renew a road tax (Motor Vehicle License) unless you show proof of an active motor insurance policy.

SMEs that own company cars, vans, or other vehicles must maintain at least the mandatory third-party insurance at all times to stay road-legal.

PIAM is the General Insurance Association of Malaysia – while not a government agency, it works closely with authorities to implement industry-wide schemes.

Notably, PIAM coordinates the Foreign Workers Hospitalisation and Surgical Insurance Scheme (SKHPPA), a compulsory insurance program mandated by the government for all foreign workers. SKHPPA is a yearly renewable hospital and surgical policy that employers must purchase for each foreign worker before a work permit or renewal is approved by Immigration.

This scheme (sometimes called FWHS) covers hospitalization and surgery costs due to illness or accident, capping the employer's financial exposure. Employers (including SMEs) can obtain SKHPPA policies from any general insurer in the PIAM list.

SMEinfo is an official one-stop information portal for small and medium enterprises in Malaysia (managed by SME Corp Malaysia, with support from BNM).

It provides user-friendly guides, checklists and articles on business compliance, licensing and best practices. On insurance matters, SMEinfo offers plain-English explanations of employers' obligations.

The portal breaks down schemes like SOCSO and EIS in simple terms and features step-by-step compliance checklists, making it easier for SME owners to understand which insurance schemes are legally mandated and how to comply.

MalaysiaBiz is the official central portal for business registration and licensing information in Malaysia. It consolidates requirements across various government agencies, serving as a "one-stop" reference for entrepreneurs and SMEs.

The portal includes guidance on employer obligations such as registering for mandatory insurance schemes. For instance, MalaysiaBiz advises that any business hiring employees must register with SOCSO within 30 days and start making SOCSO contributions for its staff.

Users can search for specific licenses or compliance "checklists" based on business type – for example, if starting a factory or a food business, the portal will list any compulsory insurance along with the relevant authority's link.